【By Observer Net, Wang Yi】In the current context where the global automotive industry is accelerating its electrification and intelligence, the Chinese market has become a crucial variable for German automakers to restructure. In recent years, China has continuously achieved technological breakthroughs in the automotive manufacturing sector, constantly refreshing industry perceptions. Now, these technological advantages of China will be "reversed" by German automakers into their global operations.

The UK's Financial Times reported on November 25 that Volkswagen Group stated, after a series of investments in China, they can now completely localize the production of electric vehicles in China, with production costs only half of those in other regions. This is also the first time that Volkswagen has developed new cars outside Germany, including testing and deploying new technologies such as assisted driving.

The largest European automaker announced that over the next five years, Volkswagen plans to launch about 30 electric vehicle models in China, betting on localized R&D capabilities.

Volkswagen revealed that due to more convenient battery procurement, shorter local R&D cycles, lower labor costs, and other improvements in supply chain efficiency, the production costs of certain models in China are reduced by up to 50% compared to the 2023 electric vehicle production costs in Germany. Additionally, the development cycle for new electric vehicles in China is shorter, having been shortened by about 30% compared to the traditional 50-month development cycle.

Thomas Ulbrich, Chief Technology Officer of Volkswagen (China), said that this new R&D facility has brought a "new level of integration" to the engineering teams. "We can now advance software, hardware, and vehicle validation processes in parallel, shorten the decision-making chain, and bring innovations to maturity faster."

Thomas Ulbrich, Chief Technology Officer of Volkswagen (China) - Volkswagen Official Website

For many years, Volkswagen has maintained a leading position in sales and market share in the Chinese market. However, with the rapid rise of innovative Chinese electric vehicle brands, its market share has continued to decline. According to data from the automotive consulting company Automobility, although Volkswagen still holds about 20% of the market share in the Chinese fuel car market, it is not among the top ten in pure electric and plug-in hybrid vehicle rankings in China.

The company has been striving to maintain its presence in the Chinese market. Since the end of 2022, Volkswagen has invested billions of euros in China to rapidly transition to electrification and maintain competitiveness. The investment includes building the Hefei R&D Center, acquiring shares in the Chinese intelligent driving technology company Horizon, and forming a partnership with the Chinese electric vehicle brand XPeng.

The Financial Times pointed out that initially, Volkswagen summarized this strategy as "Made in China, for China," but group executives are now discussing expanding the export of cars manufactured in China and planning to apply the technical achievements from China to their global operations.

The report stated that many European automakers are imitating China's fast R&D model, shortening the development cycle by hiring a large number of local engineers, cooperating with Chinese partners, and even disassembling vehicles from emerging competitors like BYD. Volkswagen is just one of them.

Renault Group, a French automaker, has also set ambitious plans to launch dozens of new models within two years by reducing the number of parts and using artificial intelligence technology. The Dacia mini car, which will be produced in Slovenia next year, promises to complete development in 16 months, setting a record for Western brands.

In October, the Spiegel Market Research Institute noted that in recent years, cooperation between Chinese and German automobile companies has become increasingly frequent, covering areas such as automobile production, battery technology, infrastructure construction, and R&D. This not only reflects the globalization trend of the automotive industry but also demonstrates the strategic efforts of both countries to consolidate their positions in global competition.

Amidst the recent discussions by the German government about "re-evaluating trade policies with China," Bloomberg reported on November 16 that Germany's largest exporters, from the automotive industry to the chemical industry, are ignoring the Merz government and continuing to invest billions of euros in new projects, further solidifying their close ties with the world's second-largest economy, China.

Data from the Mercator Institute for China Studies (MERICS) showed that during the period from 2020 to 2024, automakers accounted for about two-thirds of Germany's investments in China on average. In recent years, this investment growth has accelerated, increasing by 69% from 2023 to 2024, reaching 4.2 billion euros.

BMW has invested approximately 3.8 billion euros in a battery project in Shenyang, making China its largest R&D network center outside Germany. BMW is also exporting electric SUVs produced in China back to Europe. At the same time, Mercedes-Benz moved its annual strategy meeting to Beijing and is developing electric vehicles that will be sold only in China. Volkswagen considers China its "second-largest market" and has signed a series of agreements with several Chinese companies to accelerate its technological development.

"One of the greatest opportunities brought by cooperation lies in technological exchange," Spiegel Market Research Institute analyzed. Both sides can share expertise and benefit mutually in areas such as electric mobility, battery technology, and autonomous driving. Chinese companies often have an advantage in innovation and speed when it comes to implementing new technologies, while German manufacturers have their engineering technology expertise and years of vehicle development experience. This collaborative effect can not only reduce R&D costs but also accelerate the introduction of new products to the market.

The institute pointed out that another advantage lies in mutual market access. Through cooperation with Chinese companies, German automakers can directly enter the world's largest car market; conversely, Chinese companies can also gain an advantage in the European market by leveraging the reputation, technology, and sales systems of German companies. Additionally, joint platforms and production bases can bring economies of scale, which is particularly important in the increasingly fierce global competition.

Spiegel Market Research Institute believes that under the industry context of transitioning to electrification, connectivity, and autonomy, this international cooperation opens up new perspectives for innovation, sustainable development, and economic growth. "If both sides can cooperate equally, jointly set standards, and learn from each other, it not only brings mutual benefits but also leads the global industry development together."

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